683. In the New Space Race, Who Makes the Rules?

July 31, 2026

AI Summary

5 min read

In 1870s California, the richest man in the state, James Lick, wanted to be buried under a giant pyramid like a pharaoh. Astronomers convinced him to build the world’s first mountaintop observatory instead—on the condition that he could be buried under the telescope. To this day, James Lick’s remains rest beneath the main plinth of the Lick Observatory, a project that cost the equivalent of billions of modern dollars. That story, as former NASA chief economist Alex McDonald tells it, illustrates a pattern that has defined space exploration from the beginning: wealthy individuals and private capital have always financed humanity’s reach for the stars, often driven by a mix of vanity, vision, and belief in a grand story.

The Long History of Private Space Investment

McDonald’s research into the economics of historical observatories reveals that 19th-century projects like Palomar (funded by John D. Rockefeller) and Mount Wilson (funded by Andrew Carnegie) cost hundreds of millions to low billions of dollars in today’s terms when adjusted for share of the economy or skilled labor costs. That is roughly the same price range as modern NASA probes to Mars or Jupiter. The implication is clear: privately funded missions at the scale of today’s space projects have historical precedent.

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What you'll learn

1 (01:58) **Elon Musk's Trillionaire Status and the AI-Space Nexus** - The episode opens with a speculative scenario (Musk becoming the first trillionaire via SpaceX) to frame the central question: who will regulate the new space race, now driven by private AI investments.
2 (03:22) **The Historical Precedent: Wealthy Investors and Space Ambitions** - Steve Levitt introduces the idea that private wealth has long funded space projects, using the example of James Lick and the Lick Observatory.
3 (04:48) **The Economist's Long View on Space Development** - Levitt interviews Alex McDonald, former chief economist at NASA, who explains his unconventional path from would-be astronaut to space economist.
4 (07:04) **The Surprising Cost of 19th-Century Observatories** - McDonald reveals that historical observatories like Palomar and Mount Wilson, funded by Rockefeller and Carnegie, cost hundreds of millions to low billions in modern terms.
5 (10:26) **Why NASA Finally Needed a Chief Economist in 2019** - McDonald explains that NASA's previous economic work was limited to cost estimation, but the rise of private investment (billions of dollars) forced a shift toward economic strategy.
6 (13:09) **The Dual Government Motivations: Security and Signaling** - McDonald breaks down why politicians fund space programs, arguing it's not a simple optimization but a mix of national security and signaling theory.
7 (15:36) **Kennedy's Failed Attempt at Space Cooperation** - Levitt brings up that JFK offered Khrushchev a joint moon mission, which seems to contradict the signaling story.

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Show Notes

Governments started the space age. Now, billionaires and private firms are reinventing it. Guest host Steve Levitt explores what the past can teach us about a high-stakes future. (Part two of a two-part series.)

SOURCES:
- Blaise Agüera y Arcas, vice president and fellow at Google, C.T.O. of technology and society.
- Rosanna Hoffman, head of space law, policy, and sustainability at the United Nations Office for Outer Space Affairs.
- Alex Macdonald, former first chief economist at NASA, senior associate at the Center for Strategic and International Studies.
- Will Marshall, co-founder and C.E.O. of Planet Labs.

RESOURCES:
- "The mission to create a searchable database of Earth's surface," by Will Marshall (TED, 2018).
- The Long Space Age, by Alex Macdonald (2017).
- Planet Labs A.I.

EXTRAS:
- "Should A.I. Move to Space?," series by Freakonomics Radio (2026).

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